Should Developers Hire a Construction Manager or a General Contractor?

Should I hire a construction manager or a general contractor? This is a question a lot of real estate developers ask me so I figured I’d write a quick piece. Let me start with a simple definition of each.

A construction manager is brought into the project from the get-go, becoming a partner early on. The construction manager handles every phase of the construction program. They field bids and present them to the team. They also manage the entire job and crunch all the important project numbers. The construction manager works hand-in-hand with subcontractors and suppliers while overseeing their work and devising ways to add value and keep costs in check.

A construction manager also provides a higher level of transparency because they provide real-time budget estimates to the project team throughout the design and build-out process. This minimizes surprises and allows for necessary adjustments along the way. Though that does not necessarily mean a cost savings (though sometimes that is the case), the CM’s upfront information provides a measure of comfort and assurance for tenants, facilities directors and companies.

A general contractor is brought on after a full set of finished architectural and engineering drawings are created. The GC then bids out the various aspects of the job and presents the tenant with one final, tangible number—a complete package deal. Some developers find it best to work with a GC with whom they have an established relationship, particularly if it’s for a block of pre-built office spaces or for in-house turnkey projects. The GC may have his own subcontractors and engineers they are familiar with. Furthermore, based on the sheer volume of work they may even be able to secure better pricing.

Now that you have an understanding of how they differ, you may wonder: Can they both be successful? Of course. After all, a CM can do any job a GC can do and vice versa. A CM will be looking out for your best interest and your pocket book so it’s worth spending the extra money. At the end of th day, you are not actually spending more because the CM will save you around 10-20% off of the total budget.

For the real estate broker, the costs of a build-out is one of the key elements that can help cement a deal. It is also one of the major line items that matter most to a client when making decisions about the affordability of a location move.

Whether we’re working on a core and shell infrastructure assignment or an interior design project, the answer to the “CM versus GC debate” boils down to one thing: how you prefer to work. So, while the majority of the time, I recommend the CM model, that doesn’t mean that it should always be the go-to. If you have the time energy and money taking a chance on hiring a contractor from an online site or a friends then go for it. I’m a bit baised but, with a CM , the developer or broker will avoid costly mistakes and time run overs.

I hope this helps a you evaluate your options. If you have an important project you’d like to discuss, please contact us